36 N.Y.S. 835 | N.Y. Sup. Ct. | 1895
The several matters discussed in the argument of this cause arise on appeal from an order sustaining a demurrer of the defendant May A. Mathot to the complaint herein, and from an interlocutory judgment entered upon such order. The .plaintiff sued as a judgment creditor of the defendant Victor Francez. The complaint alleges the recovery of judgment, the issuance of an execution, and its return unsatisfied, and then states that the defendant Francez, in 1893, was the owner of and had in possession certain personal property upon which he made a chattel mortgage (dated October 20, 1893) to the defendant May A. Mathot, whose name was inserted as mortgagee merely “as a cloak and cover” for her husband, Louis Mathot, he being the real party to the transaction in which the mortgage was given; that “said mortgage was given to secure a usurious contract theretofore made between said Louis Mathot and said Victor Francez, to wit, an agreement to pay to Louis Mathot interest at a greater rate than six per cent, per annum, for the use of money loaned and advanced by said Mathot to said Francez, and that said Louis Mathot has received large sums of money, in pursuance of said
The case now before the court is between the demurrant and the plaintiff only. The learned judge at special term, in sustaining the demurrer, assigned two reasons for so doing: First, that the allegations of the complaint respecting the usury (the existence of which is the only claimed foundation of any right of the plaintiff to relief) are altogether insufficient; and, second, that, even had usury been properly pleaded, the action could not be maintained, ' We concur in the view taken at the" special term concerning the insufficiency of the averments of the complaint as to usury. All that is set forth is a naked statement that the original, contract, pursuant to which the Francez mortgage was given to Mrs. Mathot, was, as to the rate of interest, usurious. The allegation is that there was “an agreement to pay Louis Mathot interest at a greater rate than six per cent, per annum for money loaned,”" • which is nothing more than a mere conclusion, omitting, as it does, the very substantial element that there was a corrupt agreement to pay more than 6 per cent. All the facts thought to constitute the alleged usurious character of the agreement should have been stated, so that the court might determine from the pleading whether the contract comes under the condemnation of the law. The mere taking of or contracting for a sum which happens to be more than 6 per cent, for the loan or forbearance of money is not neces; sarily conclusive on the subject.
Cases áre frequent in which the excess over the legal rate of money paid as interest is the result of a mistaken calculation. It is the intent to exact, on the one hand, and to pay, on the other, more than the allowed rate, that taints the contract; and the-pleading should show all the facts constituting an actual corrupt agreement, or from which that corrupt agreement may be inferred. Manning v. Tyler, 21 N. Y. 567. It is not necessary to use the word “corrupt,” or even the word “usury,” if the facts establishing those incidents of the transaction are set forth (Miller v. Schuyler, 20 N. Y. 524); but merely applying epithets -or pleading a definition of usury does not constitute that “plain statement of facts” necessary to a sufficient pleading. The foregoing considerations would1.
The state of the law on the subject is summed up in Williams v. Tilt, 36 N. Y. 319. After, referring to Dix v. Van Wyck, 2 Hill, 522, and Post v. Part, 8 Paige, 640, in which it was held that a mere, stranger cannot attack the validity of a usurious security, but that it may be availed of by any one who claims under the security and in privity with the person who gave it, the court proceeds to say:
“This is the extent to which the cases have carried the right, and even the right of privies may be cut off by the waiver of the original party. Sands v. Church, 6 N. Y. 347. The contract is not absolutely void, but only voidable, at the election of the borrower or those who are privies in interest or in contract with him. Hence no other party can make the objection.”
This statement is fortified by a long list of authorities cited in the opinion.
But there is another line of cases invoked by counsel for the appellant in his general contention that the decision below was erroneous, and to which it is necessary to advert. It is agreed that the judge at special term overlooked the fact that, in contemplation of law, the plaintiff is in privity with the mortgagor.
In Dix v. Van Wyck, supra, it was held that a judgment creditor stood in legal privity with a party who gave a usurious security, and that where goods had been sold under execution, and a mortgagee thereof brought replevin for them, the defendant might set up usury as a defense, but it also held that the usurious security might be ratified. In Mason v. Lord, 40 N. Y. 476, at the suit of a judgment creditor, an assignment of a lease absolute on its face, but given as security for a usurious loan, and in effect a mortgage, was set aside in the hands of an innocent purchaser from the assignee with notice. But it distinctly appeared in that case that a judgment creditor of one Lord had a lien on the property, and the court recognized the fact that Lord, the borrower, could have waived the invalidity of the security had he chosen to do so, and thus have defeated the judgment creditor’s suit. It is > said in the opinion:
“It is claimed that Lord could waive the invalidity of the mortgage. That is true as to his own rights and the rights of all acquired from him subsequent to such waiver. But the lien of the judgment had attached before anything done by Lord that could possibly constitute a waiver.”
In the present case it does not appear at what date the plaintiff’s execution was delivered to the sheriff, so as to bind the goods
It is claimed by the plaintiff that some recent decisions of the court of appeals have an influence on the subject adverse to the views above expressed, and we are referred with confidence to Stephens v. Perrine, 143 N. Y. 476, 39 N. E. 11, where it was held that a receiver in supplementary proceedings might maintain an action against a mortgagee of chattels who had taken possession and sold under a mortgage void for failure to file it as required by statute. That mortgage was absolutely void, as the court held, and it could not be reinstated. No question of usury at all was in the case, but the action arose under another special statute, and it has no analogy with this.
The order and judgment appealed from should be affirmed, with costs. All concur.